711.2427/2–147: Telegram

The Secretary of State to the Embassy in Bolivia

confidential

77. Dept concerned lest activities Pol and Bennett reported urtels 99 Jan 30, 101 Jan 3162 and 106 Feb 1 result in Bolivian Govt taking action to deprive Panagra its legal rights under 1943 contract. Campbell, Vice Pres Panagra, has informed Dept his Co prepared make agreements with any certificated US carrier operating over its certificated routes for use of Panagra facilities on reasonable basis subject availability such facilities and services after Panagra needs met. He states Braniff has not sought any arrangement with Panagra for use facilities in Bolivia. No approach to Panagra has been made by Bolivian Govt re modification 1943 contract. However, Panagra has already obtained approval Bolivian Govt elimination service to Uyuni and contemplates approaching Bolivian Govt next few days looking to elimination services over Santa Cruz–Concepción–San Ignacio–San José sector and over Cochabamba–Sucre–Valle Grande–Santa Cruz sector, thus eliminating service to Sucre, Valle Grande, Concepción, San Ignacio and San José. Panagra expects obtain compensation from Bolivia or LAB for its investments at these points. Dept has advised Campbell such action should be taken soon and believes if taken prior to bilateral would improve situation from both Panagra and Dept [Page 366] point of view. You should make clear to Bolivian Govt Dept desires Article 8 left in agreement and US could not be a party to action such as Pol suggested. You should also make clear to Bennett while Dept recognizes his right to his opinion US position, it cannot tolerate any action by him, particularly representations to Bolivian officials, which impedes carrying out Govt’s objectives. Dept’s approval given to Braniff for Bennett proceeding to Bolivia based on understanding Bennett’s activities would be subject advice and direction of Embassy. Fact that contract grants Panagra cabotage rights not inconsistent US Govt position which recognizes right each state to deal with cabotage as it sees fit. Restrictions on frequencies mentioned by Bennett do not appear real to Dept in view full reading of contract which permits modifications by Panagra upon notice to Bolivian Govt. Braniff63 has departed US on survey tour but Dept will not hesitate requesting him recall Bennett if latter unwilling conform Embassy’s directions. Advise Dept urgently any developments.

Marshall
  1. Telegram 101 not printed.
  2. Thomas E. Braniff, head of Braniff International Airways.